Feb 21, 2023
Food inflation: Cost of chicken soared as food prices stayed high in January
The risk of a soft landing is starting to build for the second half of 2023: Strategist
Canadian chicken prices saw their largest monthly increase in nearly four decades, contributing to faster food price growth reported in Statistics Canada’s January inflation numbers.
The report released Tuesday said chicken prices rose 9 per cent in January from December – the largest increase since 1986 – amid strong demand, supply constraints, higher input costs and issues related to avian influenza.
Prices for groceries and restaurant food rose 10.4 per cent year-over-year in January, a slightly faster pace than December’s 10.1 per cent.
StatsCan said the January trend was partly driven by year-over-year meat price growth of 7.3 per cent, “resulting from the largest month-over-month increase since June 2004.” Fresh and frozen chicken prices were “a notable contributor” to the increase.
University of Guelph food economist Michael von Massow said he suspects much of the chicken price increase is related to higher costs of feed. Canada has been lucky so far to avoid “really dramatic” impacts from avian influenza felt elsewhere in the world, he said, though risk remains for future outbreaks of the virus.
Higher feed costs may have contributed to the rising cost of other meat like beef, von Massow said, due to drought affecting grain prices.
There was also year-over-year price acceleration of 15.5 per cent for bakery products, 12.4 per cent for dairy products and 14.7 per cent for fresh vegetables.
Von Massow said those increases made sense based on higher shipping costs, the relatively low Canadian dollar used to import fruits and vegetables in the winter, and extreme weather in southern California that has hurt crops and made products more scarce.
“It's discouraging, but hardly surprising,” he said of the food price report.
Restaurant food prices also rose 8.2 per cent in January, faster than December’s 7.7 per cent increase, largely a result of higher prices for fast food and takeout.
StatsCan said the Consumer Price Index rose 5.9 per cent year-over-year in January after December's 6.3 increase, while food prices kept rising.
As food prices have risen, so has consumer frustration – which many people have directed that at the leaders of Canada’s large grocery chains, which have reported big profits while Canadians face steep price tags.
Members of Parliament last week summoned the CEOs and presidents of the country’s major grocery chains, including Loblaw Companies, Metro and Sobeys owner Empire Company Limited, to testify at a federal committee studying food price inflation.
Von Massow said asking grocery leaders to testify may not be “terribly productive,” pointing to other factors impacting food costs, and lack of clear evidence that grocers are taking advantage of high inflation to raise prices.
The move by legislators is also “a little bit mistimed,” he said, as the Competition Bureau is currently studying the grocery sector’s role in high food costs, and a report expected in the next few months could offer more concrete information to ask the CEOs about.
“I think it's frankly a little bit of political theatre, calling the CEOs to parliament to testify,” he said, adding that politicians may be hoping to direct the public’s anger at grocery chains as people look for “someone to blame for high food costs.”
“Although I would argue that the government can't do a lot either, they're looking at it as an opportunity to deflect and put the blame on someone other than themselves.”